(Washington, DC) In the fall of 2002, the Government of the District of Columbia will launch a 529 college savings program designed to help families, relatives and friends save money for college expenses. The District's Office of Finance and Treasury will administer the plan. Calvert Group, Ltd. of Bethesda, MD., will be the program manager, a contract awarded by the District after a national search.

"We are very excited about bringing a college savings program to District residents as continuing education is a high priority in the District of Columbia, and we want to offer residents incentives for saving," said Mayor Anthony A. Williams. "With tuition costs skyrocketing, participating in this program could be the tool that makes going to college a reality for young people - particularly if used in combination with the District's Tuition Assistance Grant (DCTAG) Program."

As part of the DCTAG program, students attending public colleges and universities anywhere in the United States are eligible to receive a grant of up to $10,000 per year to pay the difference between in-state and out-of-state tuition. Students attending private colleges in the District metropolitan area or attending historically black colleges nationwide are eligible to receive a grant of up to $2,500 per year.

The District's new 529 plan takes advantage of federal tax law that permits states to administer college savings plans on a tax-deferred basis. Earnings used for qualified higher education expenses will be free of federal taxes. The District's plan will be available to the city's residents as well as those living outside of Washington, DC; residents, however, will receive preferred pricing for participation and certain tax benefits.

Earnings on qualified withdrawals made by District residents will be exempt from District income taxes. Residents qualify for up to $3,000 in annual District tax deductions for contributions per taxpayer and may qualify for up to $6,000 in annual tax deductions for married couples filing jointly where each taxpayer owns an account. If contributions exceed the allowed deduction in a year, the excess can be carried forward and deducted in subsequent tax years for up to five years.

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